Facebook’s Q3: Marketers Love Us — Teens, Slightly Less So

Making money from mobile users — once considered a grim prospect for the social giant — has come faster than many could have anticipated; mobile revenue now accounts for nearly half of all ad revenue for the company. Growth is also up across the board in terms of user numbers.

Alas, that happiness was short-lived; after the stock skyrocketed 12 percent in after-hours trading to top more than $55, shares took a nosedive on the news that the company saw “a decrease in daily users — specifically among younger teens” in its estimates. In mere minutes, the stock lost nearly $18 billion in market value.

While that’s certainly a problem the company has to solve, most of the call was fairly good news — ARPU is up, CapEx is down and mobile is humming along nicely.

Read my live coverage of the conference call with CEO Mark Zuckerberg, COO Sheryl Sandberg and CFO David Ebersman from earlier today, below.

2:03 pm: Zuckerberg drops some more impressive stats, playing up all the mobile usage. (Like I said, mobilemobilemobile.)

2:03 pm: The first Internet.org reference.

Zuckerberg is huge on this, his initiative to “connect the world” and bring the Web to the many developing countries that aren’t online.

“We believe we’re in a unique place to help encourage growth of the internet,” he said.

2:05 pm: So Zuckerberg playing up the Onavo acquisition, which Facebook made a few weeks ago. Basically helps with data compression on smartphones. That helps bring down the amount of data your smartphone uses.

Something to think about — relatively small network using Onavo. Perhaps Facebook will be able to increase that reach?

2:07 pm: Mark Zuckerberg says “Um,” stammers a second. Whoopsie.

2:07 pm: So we’re talking about graph search now. Which is funny, since we really haven’t heard about that product since it launched at the beginning of the year.

2:11 pm: “We don’t build services to make money, we make money to build better services.” Quoting himself from his original S-1 letter.

2:11 pm: And now Sheryl Sandberg.

Surprise! She plays up mobile ad revenue.

As she should — the shift is really remarkable.

2:12 pm: Priorities in the coming quarters … mobile.

2:12 pm: Okay, here we go. Sandberg calls out a plethora of social companies by name — including Twitter and Snapchat — stating how much more time people spend on Facebook compared to all the others combined.

2:13 pm: Sandberg talks about how much marketers love Facebook. Good reminder, considering the major diss Forrester Research sent its way this week.

2:14 pm: Sandberg says mobile app install ads are “going very well.”

No real detail there. Would love to have some numbers on this particular ad unit.

2:16 pm: More talk about how awesome Facebook marketing is.

2:17 pm: Cue CFO Ebersman now.

2:17 pm: Points out that the daily active users on the Web are declining — though slightly.

2:18 pm: Woah. Ebersman acknowledges that there is indeed some dip in teen engagement on Facebook — though couches that in very jargony terms about how those details are “of questionable statistical significance.”

2:20 pm: That’s a big deal. Just a quarter ago, Zuckerberg himself was rebutting this idea big time.

2:20 pm: No wonder Zuckerberg wants to buy Snapchat so badly.

2:22 pm: ARPU is up! That’s good.

2:22 pm: Lots of numbers. Expenditures are pretty big at $284 million — to be expected, as Facebook continues saying that it’s willing to reinvest in its business over time.

2:24 pm: Payments revenue expected to be down next quarter.

Significant, yet also not the bulk of Facebook’s business.

2:25 pm: Facebook expects it won’t spend as much next year as it thought it would, but will still spend quite a bit — about $1.4 billion.

2:25 pm: Q&A time! A question on geotargeted ads.

2:26 pm: To backtrack a bit, payment revenue will be down because Q4 last year was measured over four months, not three. So makes sense.

2:45 pm: So we’re having a high-level conversation about Facebook’s abilities to search things.

Interesting part here is that he’s not making a direct comparison to Google. Says it’s rather about surfacing the different insights and relevant data inside Facebook.

2:48 pm: Sandberg says they believe FB hosts more than 20 million small business pages (though a fraction of those are likely advertisers).

“It’s really difficult to get small businesses to utilize tech” like Facebook, she cautions.

2:49 pm: I get that. Also, I wonder what the return on a small business’ Facebook page actually is.

After all, how much attention will your Facebook business page receive if you aren’t a top 100 — or even top 500 — brand?

2:52 pm: I am genuinely curious about that.

2:52 pm: Question about mobile app install ads!

Ebersman didn’t give me any details before, doubt he will now.

2:53 pm: Yep. Sandberg says “developers are a really interesting place for us.” Think they have the best mobile ad product in general (swipe at Twitter!), gives Facebook an opportunity to both attract developers and sell more ads.

2:54 pm: Again, just an “interesting area” for Facebook. I feel like this is downplaying it, though.

2:55 pm: Yes! Smart analyst asks smart question about hashtags. Can you use them for ad targeting?

2:55 pm: Zuckerberg downplays that.

But says the company is putting more effort into public content. “There’s a large set of content that is public which is often high quality content as well.”

2:56 pm: I.e. — watch out, TWTR.

2:56 pm: A question on how well the trending topics are doing.

In other words — all those products you’re aping from Twitter, how’s that working out for you?

2:56 pm: Zuckerberg says, “Doing well.”

Also, Zuckerberg says public content focus isn’t anything new for Facebook — more that the company is doing it better.

Not sure if I buy that.

2:58 pm: Rich Greenfield from BTIG asks about Instagram ads.

How are you going to do it? New types of ads coming?

2:59 pm: Sandberg defends how good all of Facebook’s ads are. Small test with Instagram right now.

3:02 pm: Sandberg ends the call with a big emphasis on making it easier for marketers to buy Facebook ads. Also plays up the opportunity of SMB and long-tail.

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